Prior to receiving the quest hired muscle from Farkas, I had used Faendal from Riverwood as a companion. Faendal died while plundering a dungeon. However, Farkas still requested I beat up Faendal. He refuses to acknowledge he is dead and the quest arrow keeps leading me to his corpse. No other Companion will assign me a task and therefore I cannot progress in the Companion "guild." I have installed the most recent update and it has not solved the issue.

Probably nothing more you can do than load a save from before taking that job from Farkas. It's a good idea to make a save before taking on any Radiant quest in this game.